RMB rallies behind Botswana’s renewable energy plans

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Gazette Reporter

Solar could provide a meaningful contribution to Botswana’s energy demands, according to Tiago Almeida, a financial transactor at Rand Merchant Bank (RMB), a unit of First National Bank (FNB).

Almeida was speaking during the 2nd Renewable Energy and Power Infrastructure Investors Conference held recently at the Gaborone International Convention Centre (GICC). Almeida considered the merits  of  sourcing solar power in Botswana and related hurdles and possible financing solutions to fund the green energy source.

He said with its high number of clear days in a year, Botswana provides an excellent solar resource, so the logical conclusion is that solar could provide a meaningful contribution to Botswana’s energy demands. The increasing cost and unreliability of power from Eskom in South Africa provided the impetus for the Botswana government to research renewable energy, with the most obvious contender being solar.

In early 2017, the Botswana Power Corporation (BPC) decided to start a programme to procure 100MW of solar energy and exploit the plentiful natural resource. Solar power solutions have also become far more affordable and commercially viable over the past few years. Many issues that plagued solar have also been resolved. The introduction of hybrid systems using more sophisticated battery technology and diesel generation to store energy and boost production at peak times has resolved a constraint that solar power could only be generated during the day.
Almeida  however said a key stumbling block to funding solutions of renewable energy in Africa is a possible currency mismatch, which is created when investors invest in USD and the collection of tariffs is done in the local currency. Almeida believes that solutions should be considered to originate the financing solutions in the local currency, which prevents countries being exposed to potential harmful swings in the dollar related exchange rates.

“Being the largest commercial bank in Botswana and with our experience in structuring these Power Purchase Agreements (PPA), we believe we could assist to provide expertise in defining the “bankable” risk allocation for the PPA, boosting investor and banks appetite for the programme and also create solutions in underwriting the deals in Pula,” noted Almeida.
Based on the pivotal role RMB played in South Africa’s REIPPP, the team is further well positioned to assist BPC to move their renewable energy programme forward.

Almeida believes that with the buy in of the Botswana government to procure some 100MW of power through solar and innovative funding solutions, the country could forge a path to a sustainable energy source for thousands of homes.
Tiago joined RMB in 2012 primarily as a transactor and has been largely involved in project finance transactions across Africa, focussing on power projects, such as greenfield and brownfield IPPs, logistic facilities, ports and toll roads. Notably Tiago was involved in the USD1.2 billion financing of a greenfield port in Nigeria, a USD 120 million port expansion in Ghana and assisting to provide USD 200 million sovereign facilities for Angola. United Nations Development Programme Botswana is one of the players that are working on the production of biogas from waste. They are currently working of building biogas stations around the country that will assist with generating power.

“Renewable energy is expected is expected to contribute at least 20 percent of electricity consumption in the country by the year 2030. By doing so we want to improve the security of energy and assist in waste management,” said Jacinta Barrins the resident representative from UNDP Botswana.